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Economic Efficiency. Market Failure and Regulation. 2008 /24175. Economic Efficiency. Market Failure and Regulation – The Long Term Interests of Consumers. Lyndon Rowe Chairman Economic Regulation Authority 28 April 2008. The Economic Regulation Authority. Functions

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economic efficiency market failure and regulation the long term interests of consumers
Economic Efficiency. Market Failure and Regulation – The Long Term Interests of Consumers

Lyndon Rowe

Chairman

Economic Regulation Authority

28 April 2008

the economic regulation authority
The Economic Regulation Authority

Functions

  • Administers Access to Monopoly Infrastructure
  • Licenses Service Providers
  • Monitors & Regulates Markets
  • Inquiries (Referred by Government)
the governing body
The Governing Body

Full Time Chairman: Lyndon Rowe

Part Time Members: Steve Edwell, Peter Panegyres

Independent of Government, Industry & Consumers

economic regulation authority
Economic Regulation Authority

Governing Body

Lyndon Rowe – Chairman

Steve Edwell – Member

Peter Panegyres - Member

General Manager

Peter Kolf

Planning & Executive Support

Chris Brown

Executive Director

Competition

Markets &

Electricity

Robert Pullella

Director

Gas & Rail Access

Russell Dumas

Executive Director

Licensing, Monitoring & Customer Protection

Paul Kelly

Director

References & Research

Greg Watkinson

Manager

Finance & Administration

Pam Herbener

completed inquiries mostly in the water industry
Completed Inquiries - Mostly in the Water Industry
  • Annual Inquiry into the Bunbury and Busselton Water Boards’ Tariffs Feb 2008
  • Annual Inquiry on the Water Corporation’s Tariffs Jan 2008
  • School Bus Operators’ Charter Bus Operations Jul 2007
  • Annual Urban Water & Wastewater Pricing May 2007
  • Harvey Bulk Water Pricing May 2007
  • Country Water & Wastewater Pricing July 2006
  • Esperance – Kalgoorlie Bulk Water Supply Nov 2005
  • Urban Water & Wastewater Pricing Nov 2005
current inquiries
Current Inquiries
  • Inquiry into Competition in the Water & Wastewater Services Sector
  • Inquiry into Developer Contributions to the Water Corporation
  • Review of the Grain Marketing Act 2002
competition in the water wastewater services sector
Competition in the Water & Wastewater Services Sector
  • Terms of Reference
  • Issues Paper
    • Submissions closed 31 August 2007
  • Draft Report
    • Submissions closed 1 February 2008
  • Further Consultation Report
    • Submissions due 16 May 2008
  • Final Report
    • Presented to Government 30 June 2008
developer contributions to the water corporation
Developer Contributions to the Water Corporation
  • Terms of Reference
  • Issues Paper
    • Submissions closed 14 December 2007
  • Draft Report
    • Published 14 April 2008
    • Submissions due 16 May 2008
  • Final Report
    • Presented to Government 30 June 2008
review of the grain marketing act 2002
Review of the Grain Marketing Act 2002
  • Terms of Reference
  • Issues Paper
    • Submissions closed 8 February 2008
  • Draft Report
    • Published 7 April 2008
    • Submissions due 16 May 2008
slide11

Gas Pipeline

  • Infrastructure:
  • DBNGP
  • GGP
  • AGN Dist System
  • Kambalda Lateral
  • 7 Licences
slide12

Electricity

  • Infrastructure:
  • SWIN
  • 30 Licences
slide13

Rail

  • Infrastructure:
  • Westnet Rail
  • PTA
slide14

Water

  • Services:
  • 30 Licences
economic efficiency
Economic Efficiency
  • Technical
  • Allocative
  • Dynamic
slide16

Interests of Consumers

Optimum

Electricity

All other commodities

producer and consumer surplus

MC

Consumer Surplus

Producer Surplus

Total Cost

AR

Producer and Consumer Surplus

Price

p x q = Total Revenue

p

Quantity

q

supply of goods services
Supply of Goods & Services

Rivalry

Private Goods

Bread, Butter etc

Common Property

Fisheries, Water resources etc

Not

Excludable

Excludable

Mixed Goods

Pipelines, Wires etc

Public Goods

Free to air, Defence etc

No Rivalry

market failure
Market Failure
  • Public Goods
  • Externalities
  • Market Power
  • Imperfect Information
era regulation
ERA Regulation
  • Market Failure is Monopoly Power
  • Access
  • Monopoly Pricing
monopoly diagram
Monopoly Diagram

P

MC

Ppm

AC

Ppo

D=AR

MR

Q

Qpo

Qpm

Qe

examples of the challenge water pricing
Examples of the Challenge- Water Pricing
  • Developer Charges
  • Usage Charges
  • Fixed Charges
examples of government failure
Examples of Government Failure
  • Environmental
  • Sprinkler Restrictions in Bunbury
  • Recycled Water in Bunbury